Broadband Plan Spoiling for a Fight Over Spectrum, USF

While the hulking broadband plan the FCC delivered to Congress this week contains many proposals that enjoy popular support, industry groups have staked out battle lines over the recommendations for spectrum and telecom subsidies.

"If you actually read the commentary, everyone supports large parts of it," Blair Levin, the
executive director of the FCC's Omnibus Broadband Initiative, said on Wednesday in remarks at
the Brookings Institution. But he quickly added that the far-ranging recommendations the plan
proposes have inevitably sparked opposition from various corners of the Internet sector.

Levin explained that many of the plan's recommendations were intentionally broad, leaving the
details of arcane matters  like shared access to infrastructure  to the commissioners to
define in rulemaking proceedings. Phoebe Yang, the broadband team's general counsel, said she
expected the plan to lead to more than 40 notices of proposed rulemaking over the next 12 months
to 18 months.

"We wanted to have a document that was both visionary and practical," Levin said, describing
the balance the team aimed for in producing a plan that was "simultaneously comprehensive and
targeted."

The FCC formally delivered the plan to Congress on Tuesday, inviting a wave of perfunctory
plaudits in the form of corporate blog posts and statements e-mailed to reporters. Most offered
high praise for the 13 months of work the broadband team put into developing the plan, including
President Obama, who in a statement said, "My administration will build upon our efforts over
the past year to make America's nationwide broadband infrastructure the world's most powerful
platform for economic growth and prosperity, including improving access to mobile broadband,
maximizing technology innovation and supporting a nationwide, interoperable public safety
wireless broadband network."

Mobile broadband battle

The FCC's proposal to move ahead with a public safety network is hardly controversial. Its
plans for mobile broadband, on the other hand, can be expected to meet with severe opposition
from a powerful Washington lobby. In the plan, the commission proposes to reallocate or
repurpose 500 MHz of wireless spectrum over the next 10 years for mobile data networks through a
mix of licensed, unlicensed and secondary-market mechanisms. In five years, the plan sets the
goal of reallocating 300 MHz, including 120 MHz from TV broadcasters.

"As we look out into the future it's obvious that spectrum is going to be the lifeblood of
the broadband ecosystem," Levin said. The plan proposes to establish "incentive auctions,"
through which broadcasters would relinquish their spectrum licenses in exchange for a portion of
the auction proceeds. While the National Association of Broadcasters (NAB), the chief industry
lobby, was quick to voice opposition to a spectrum reclamation program, Levin argued that that
view doesn't represent a consensus in the industry.

"There are lobbyists who are objecting but there are a lot of broadcasters I've talked to who
think this is a good idea," he said.

NAB Executive Vice President Dennis Wharton sees it differently.

"It's funny he keeps saying that," Wharton told InternetNews.com when asked about
Levin's comments. "I haven't seen any groundswell of support from broadcasters to leave the
broadcast business."

Wharton said that to reach the spectrum goals outlined in the broadband plan, numerous --
perhaps hundreds -- of broadcast stations would have to close down. While he admitted that a few
of the 1,700 TV stations represented by the NAB might be willing to take the deal, the group
plans to oppose any measure to pressure broadcasters to relinquish their spectrum, warning of
the loss of independent or niche stations, as well as the threat to new mobile TV services.

"I don't see how you can take 120 MHz of spectrum from broadcast without a considerable
number of stations not shutting down. That doesn't seem feasible to me," he said.

"We spent a lot of time and a lot of effort and a lot of money working as a partner with
government to get through the digital television transition," Wharton added. "Now nine months
later the FCC seems to be suggesting that broadcasting really doesn't matter that much anymore."

Both the incentive auction program as well as a proposal in the broadband plan to impose fees
on license holders who are not using their spectrum to optimal efficiency would require
congressional authorization, which invites the prospect of a protracted political battle similar
to the campaign the NAB organized in opposition to the opening of TV white spaces for wireless
networks  a fight it ultimately lost.

"Over the years there have been numerous attempts to get the broadcasters to give up
spectrum," Larry Spiwak, president of the Phoenix Center think tank, told
InternetNews.com. "The broadcasters have always resisted. This is a time-honored fight
between the broadcasters and everyone else."

A Senate committee and House subcommittee have both scheduled hearings next week to review
the broadband plan. Supporters of the spectrum programs outlined in the plan can be expected to
rally for congressional support to set the auction process in motion.

"Incentive auctions may be the most important thing Congress has to do," Levin said. "I think
that debate will evolve in some very interesting ways over the next twelve months."

While the hulking broadband plan the FCC delivered to Congress this week contains many proposals
that enjoy popular support, industry groups have staked out battle lines over the
recommendations for spectrum and telecom subsidies.

"If you actually read the commentary, everyone supports large parts of it," Blair Levin, the
executive director of the FCC's Omnibus Broadband Initiative, said on Wednesday in remarks at
the Brookings Institution. But he quickly added that the far-ranging recommendations the plan
proposes have inevitably sparked opposition from various corners of the Internet sector.

Levin explained that many of the plan's recommendations were intentionally broad, leaving the
details of arcane matters  like shared access to infrastructure  to the commissioners to
define in rulemaking proceedings. Phoebe Yang, the broadband team's general counsel, said she
expected the plan to lead to more than 40 notices of proposed rulemaking over the next 12 months
to 18 months.

"We wanted to have a document that was both visionary and practical," Levin said, describing
the balance the team aimed for in producing a plan that was "simultaneously comprehensive and
targeted."

The FCC formally delivered the plan to Congress on Tuesday, inviting a wave of perfunctory
plaudits in the form of corporate blog posts and statements e-mailed to reporters. Most offered
high praise for the 13 months of work the broadband team put into developing the plan, including
President Obama, who in a statement said, "My administration will build upon our efforts over
the past year to make America's nationwide broadband infrastructure the world's most powerful
platform for economic growth and prosperity, including improving access to mobile broadband,
maximizing technology innovation and supporting a nationwide, interoperable public safety
wireless broadband network."

Mobile broadband battle

The FCC's proposal to move ahead with a public safety network is hardly controversial. Its
plans for mobile broadband, on the other hand, can be expected to meet with severe opposition
from a powerful Washington lobby. In the plan, the commission proposes to reallocate or
repurpose 500 MHz of wireless spectrum over the next 10 years for mobile data networks through a
mix of licensed, unlicensed and secondary-market mechanisms. In five years, the plan sets the
goal of reallocating 300 MHz, including 120 MHz from TV broadcasters.

"As we look out into the future it's obvious that spectrum is going to be the lifeblood of
the broadband ecosystem," Levin said. The plan proposes to establish "incentive auctions,"
through which broadcasters would relinquish their spectrum licenses in exchange for a portion of
the auction proceeds. While the National Association of Broadcasters (NAB), the chief industry
lobby, was quick to voice opposition to a spectrum reclamation program, Levin argued that that
view doesn't represent a consensus in the industry.

"There are lobbyists who are objecting but there are a lot of broadcasters I've talked to who
think this is a good idea," he said.

NAB Executive Vice President Dennis Wharton sees it differently.

"It's funny he keeps saying that," Wharton told InternetNews.com when asked about
Levin's comments. "I haven't seen any groundswell of support from broadcasters to leave the
broadcast business."

Wharton said that to reach the spectrum goals outlined in the broadband plan, numerous --
perhaps hundreds -- of broadcast stations would have to close down. While he admitted that a few
of the 1,700 TV stations represented by the NAB might be willing to take the deal, the group
plans to oppose any measure to pressure broadcasters to relinquish their spectrum, warning of
the loss of independent or niche stations, as well as the threat to new mobile TV services.

"I don't see how you can take 120 MHz of spectrum from broadcast without a considerable
number of stations not shutting down. That doesn't seem feasible to me," he said.

"We spent a lot of time and a lot of effort and a lot of money working as a partner with
government to get through the digital television transition," Wharton added. "Now nine months
later the FCC seems to be suggesting that broadcasting really doesn't matter that much anymore."

Both the incentive auction program as well as a proposal in the broadband plan to impose fees
on license holders who are not using their spectrum to optimal efficiency would require
congressional authorization, which invites the prospect of a protracted political battle similar
to the campaign the NAB organized in opposition to the opening of TV white spaces for wireless
networks  a fight it ultimately lost.

"Over the years there have been numerous attempts to get the broadcasters to give up
spectrum," Larry Spiwak, president of the Phoenix Center think tank, told
InternetNews.com. "The broadcasters have always resisted. This is a time-honored fight
between the broadcasters and everyone else."

A Senate committee and House subcommittee have both scheduled hearings next week to review
the broadband plan. Supporters of the spectrum programs outlined in the plan can be expected to
rally for congressional support to set the auction process in motion.

"Incentive auctions may be the most important thing Congress has to do," Levin said. "I think
that debate will evolve in some very interesting ways over the next twelve months."

Bigger challenge

But as tough as spectrum reform will be, Spiwak suggested that the broadband plan's proposals
for overhauling federal telecom subsidies and phasing out intercarrier compensation (ICC), the
rates telecom providers pay each other for the transmission of phone calls, will be much more
difficult.

The ICC rules were developed at a time when many people used different providers for local
and long-distance telephone service, and are widely considered to have fallen out of step with
the way the telecom market has evolved.

"The current per-minute ICC system was never designed to promote deployment of broadband
networks," the broadband team wrote in the plan. The plan recommends ending the per-minute ICC
"implicit subsidies" over the next 10 years, which could spark opposition from smaller, rural
carriers that don't want to see the funds evaporate.

The broadband plan suggests that the reform to the Universal Service Fund, which would
replace the federal telecom subsidy with a Connect America Fund for broadband service, could
help carriers recoup some of the money they stand to lose with the end of ICC.

USF and intercarrier compensation reform have been on the FCC's agenda for years.
Commissioner Robert McDowell said both were "embarrassingly overdue" in remarks at the
commission's meeting this week.

But shortly after the release of the plan, some of the smaller carriers began raising
familiar objections. In a statement, the CEO of the National Telecommunications Cooperative
Association, whose members include independent, local telecom providers, praised the FCC for
proposing to include broadband to USF, but warned that phasing out the telecom subsidy in the
fund and ending intercarrier compensation "would discourage rural investment and would make it
unlikely that affordable broadband services could be further deployed and maintained in many
high-cost rural areas."

That's a familiar refrain to long-time telecom policy observers.

"Like it always is in telecom, we will be arguing over compensation, subsidies and pressure
to keep rates as low as possible. And that's always the difficult part of the business," Spiwak
said.

But as tough as USF and ICC may be, Spiwak said the long-overdue reforms were "right on the
money."

"If you really look at the substance of the plan, they're doing the right thing," he said.
"Conceptually, I think the commission is moving in the right direction."